Updates, news, and musings on the latest developments in white collar crime defense, government investigations, and enforcement actions

by Ariel A. Neuman

Let the Feds Make Mistakes

Let the Feds Make Mistakes

March 2016

When the Government makes a mistake in the course of a criminal investigation, defense attorneys would be smart not to jump to correct it. Last week, U.S. District Judge Charles Breyer in San Francisco dismissed all of the drug trafficking and related charges pending against two FedEx corporate entities in a controversial prosecution because the Government lawyers made a mistake in its “tolling agreements:” they named the wrong corporate entity. (Charges against a third are still pending.)

Tolling agreements are contracts whereby an individual or entity can agree to waive an otherwise applicable statute of limitations (translation: legal deadline for filing criminal charges). There are all kinds of reasons that it might be in the individual or company’s interest to do so, but the most common is when they think that with a little more time, they might be able to convince the Government not to prosecute.

In this case, the Government lawyers drafted the tolling agreements (as they usually do) and named the wrong FedEx corporate entities in the document, thinking they were including all FedEx entities. FedEx’s lawyers did not say anything and just signed the documents. Then, when other corporate entities were indicted after the statute of limitations had run, FedEx argued that the Government had missed the deadline for filing.

The Government, perhaps unsurprisingly, blamed FedEx. Government lawyers claimed that FedEx knew what the Government meant and should have corrected their mistake. Judge Breyer had none of it. In a ten-page ruling, Judge Breyer blasted the Government for even arguing that FedEx was at fault, pointing out that FedEx’s corporate structure is available from numerous public sources. He also agreed with FedEx that only the Government knows who it is investigating: thus, FedEx had no duty to assume that the Government was asking the wrong corporate entity to sign the tolling agreement; maybe that was the only entity the Government thought was at fault.

The lesson for defense lawyers is clear: if the Government is making a mistake during the course of an investigation, don’t jump to correct it. In this situation, it would not be uncommon for a defense attorney to unthinkingly mention that the entity named in the tolling agreement is wrong or is not the entity that was being discussed, or something else that would help “correct” the tolling agreement. But that obviously would have been a mistake. When you face this kind of situation, consider carefully whether you have a duty to correct it and if not, whether the mistake might help your client. It just might end up getting them out of a jam.